A new bill proposed by Treasury intends to amend five acts, including one which will affect state banks.
Treasury officials on Tuesday briefed the Standing Committee on Finance on the Financial Matters Amendment Bill, which was open for public comment between August 24 and September 14, 2018. The bill has been submitted to Cabinet for approval.
There are five acts affected are the Insolvency Act, the Military Pensions Act, the Government Employees Pension law, the Banks Act and the Auditing Profession Act.
The committee particularly asked Treasury about amendments to the Banks Act. The current act only allows for public companies to establish a bank. Given that state owned companies are no longer classified as public companies in terms of the Companies Act, they cannot apply to establish a bank.
The bill proposes that a qualifying state-owned company be able to establish a bank, after first obtaining approval from the finance minister along with concurrence with the minister responsible for the state-owned company to apply for authorisation. This provided the assets of the holding company exceed liabilities.
MPs asked Treasury what the rationale is to amend the banks act, to this Treasury's chief director of financial markets and stability Roy Havemann said that the reasons are part of the idea of Twin Peaks model of the financial sector to have all entities doing similar business regulated in a similar way. This applies to privately owned entities and state-owned entities.
Postbank
In the past state banks have not been supervised in the same way as other banks. For example, when the Banks Act was first passed by Parliament in 1990, the framework for the Postbank had allowed for it to operate under exemption. But given that Postbank has a growing footprint, beyond just distributing grants and now taking deposits from account holders, Treasury recognised it is necessary that it no longer operates under exemption if it is doing the same business of other banks.
Postbank particularly has made progress and has become a "well-run" bank, Havemann said. The bank has strengthened its risk management systems and has gone through a technology upgrade over the past year, among other things.
Standing Committee of Finance Chair Yunus Carrim and other members of Parliament also put forward that the management Post Office (holding company) and Postbank be kept separate.
We do not want have a situation where depositors lose money because of problems with the Post Office," EFF MP Floyd Shivambu said. For this reason separate boards and management are necessary to ensure one does not affect the other.
To this Carrim agreed, and said it is important to keep the entities separate. Postbank must be separated, to avoid failure linked to the SA Post Office, he explained.
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